A lot of people want a fresh start when it comes to their financial situation. As a matter of fact, the United States has debt in taxes worth approximately $527 billion. Fortunately, the Internal Revenue Service (IRS) recognizes that a lot of people are facing debt. This is why they have the Fresh Start Program, which offers support in helping people with debt. Let us take a look at how the Fresh Start Program might be able to help your finances.

Understanding The Fresh Start Program

When individuals consider the Fresh Start Program, they might think of only one debt relief option. The Fresh Start Program is actually a general term for a wide range of IRS debt relief assistance. The main idea of this program is to offer support to taxpayers in managing their debt and penalties while abiding by the law. There is a wide range of options out there for people to handle their debt. The most suitable way to work on the debt will differ based on the current situation. The IRS issued this program in 2011 because they wanted taxpayers to get in good financial condition through debt relief options. This offers taxpayers a chance to manage their tax debt without worrying about penalties such as:

• Wage Garnishments
• Liens and Levies
• Time in Jail

The most suitable way to manage your debt can differ. It is important to contact an expert in taxes for you to understand your best option. Debt relief opportunities that belong to this program include the following:

• Currently Non-Collectible (CNC)
• Installment Agreement (IA)
• Offer in Compromise (OIC)
• Penalty Abatement

Currently Non-Collectible (CNC)

Individuals tend to avoid the IRS as a way to solve any issues with their taxes. Avoiding is not the right call and it will not help you out of your situation, either. Rather, a CNC status might be the most suitable option for you. The CNC tax program prevents your tax debt from collecting. This is a great debt relief opportunity for individuals that need to pay off money to the IRS and cannot pay it back. A taxpayer will be recognized by the IRS/State if their gross income per month is less than their allowable expenses based on national standards. When you reach that limit, your financial background will prove that you cannot pay what you owe without struggling financially. This is why the program puts a hold on your tax debt collection.

What are the Advantages of the CNC Program?

Many advantages are associated with this relief option. The greatest advantage is the fact that taxpayers can receive support for their huge tax bills. There is no need for anxiety about tax debt collection. Other than that advantage, another benefit to the CNC program is that the IRS or any other state taxing authority will prevent penalties for taxpayers. This includes bank levies, the seizing of assets, and more.

Another advantage of this program is that there is a possibility that you will not need to repay your tax debt once you participate in the CNC program. When you have a CNC status, the statute of limitation on your tax debt will still go on. Better known as the IRS Expiration of Statutes (CSED), the IRS considers your debt as disqualified for collection, in the case that the debt extends until the 10-year statute on your back taxes.

Installment Agreement (IA)

Sometimes, at the end of the year, individuals owe taxes that they might not be able to pay in full. If they are unable to make payments, they might find themselves dealing with fees, penalties, and maybe an arrest. This is where an IRS Installment Agreement plays a role. Typically, the IRS and state taxing authorities can offer taxpayers the chance to repay their debt in installments and payment plans. This offers taxpayers the opportunity with more time to pay off their debt.

How To Qualify for an Installment Agreement

If you cannot repay your tax debt, then you might gain a lot from this opportunity. However, to benefit, you need to:

• Stay on top of your filed tax returns
• Offer disclosure on your cash and assets
• Provide evidence that you cannot repay the amount you owe
• Provide evidence that you are unable to borrow the amount you need to pay from a lender

Offer in Compromise (OIC)

The OIC program can offer support to people that are interested in settling their delinquent taxes for a lower expense than they actually owe. If you are interested in decreasing the amount you owe, then this might be the right option for you! It is important to keep in mind that not anyone can gain from this program. You need to fill out an application. Unfortunately, even if you are eligible, the IRS only allows less than half the amount of applicants per year.

What You Should Know About the OIC Program

When you are filling out your application, you should consider the help of a tax expert. They can guide people in the right direction and make sure that your application has a greater chance of getting accepted. If you are interested in benefiting from this program, then you can only receive approval if you have completely followed through with all your old tax returns. Typically, the IRS looks through a background of six years.

When you fill out your application, then you will need to send it. Once you send in your application, the IRS looks through your current finances to understand whether you can pay off your tax debt or not. You might need to offer additional information about yourself.

Penalty Abatement

The IRS is known for its penalties and consequences. Taxpayers will automatically receive penalties through their digital system. People need to be careful since penalties can accumulate faster than they think. Additionally, it can lead from a high tax debt to an even higher tax debt. In the case that you are looking at penalties from the IRS, you could gain a lot from penalty abatement. This could be a challenge, which is why you should consider contacting a tax expert, similar to other options in this article. On the other hand, it is incredibly important to consider professional support because the penalty abatement application could include IRS terminology, codes, and processes that could be challenging to understand.

The Importance of Reasonable Cause

When recognizing the penalties, you should provide evidence of reasonable cause that results in you not being able to manage your tax debt. Popular examples of reasonable cause are:

• Natural disasters
• Disturbances
• Lack of ability to obtain records
• Death of a taxpayer’s family member
• Serious medical conditions of the taxpayer or of a taxpayer’s family member

No matter what the reasonable cause is that resulted in the lack of managing tax debt, you should present documents to prove it.

How to Qualify and Apply for the IRS Fresh Start Program

Now that you understand the different relief opportunities under the IRS Fresh Start Program, it is important that you know how to qualify. Each option focuses on helping a different target group. This means that you can probably find an option to help out with your finances. You should contact a tax expert that will know which option fits your financial needs best.

The IRS set eligibility requirements to create a trusting relationship with taxpayers and to hold them accountable. Some of these requirements include the following:

• Single filers cannot make more than $100,000 per year
• Joint filers cannot make more than $200,000 per year
• Self-employed individuals need to offer evidence of a 25% drop in net income
• A person’s tax balance must be lower than $50,000 before the year ends

If you are interested in applying for this program, you should look for the right eligibility form. Each relief opportunity under the Fresh Start Program will have its own version of forms. When filling out eligibility forms, you need to make sure that you provide accurate and honest information.

Overall

If you are a taxpayer that is currently going through tax debt, then you might be able to gain a lot from the Fresh Start Program. There is a wide range of different debt relief options through this program, such as:

• Currently Non-Collectible (CNC)
• Installment Agreement (IA)
• Offer in Compromise (OIC)
• Penalty Abatement

If you are interested in looking for the best debt relief opportunity to help your situation, then you should contact a tax expert. These experts can guide you in the right direction and help you with your application. Generally, you should start working on the application process as soon as possible. This can make it easy for you to get around dealing with any consequences when you are managing your tax situation.